Quote:
Originally Posted by bob
I'm not an economist, so please someone explain this to me:
"But economists on the left and the right argue that to really rein in health costs, Congress should scale back or eliminate the tax exclusion on what employers pay toward employees’ health insurance premiums."
How does increasing taxes on health insurance premiums reduce overall healthcare costs?
|
A few ways and it depends on what you'll replace it with. Right leaning economists would argue that employer sponsored insurance encourages workers to buy the most expensive insurance coverage and then use it as often as they can (and not caring about the medical providers they use). And they would say that knowledge of what health care costs would have people making more rational decisions on that care as it would impact them more. I think they'd also argue that providers would get more serious about reducing prices because now they know that employer sponsored insurance will pay just about whatever they bill if a patient has coverage.
Left leaning economists would argue than in state run health care systems, the government can negotiate lower prices (as is done in other countries - you'll note that American health care spending per capita is far higher than in other first world countries). The argument can also be as Chief Rum pointed out, the excessive bloat and overhead increase costs exponentially as well.